The federal banking regulator is keeping its domestic stability buffer on hold as it says financial system vulnerabilities remain elevated but stable, while near-term risks continue to be low despite some recent increase.
The Office of the Superintendent of Financial Institutions says its domestic stability buffer will remain at 3.5 per cent of total risk-weighted assets.
It says household debt remains a concern and uncertainty persists regarding the impact of future payment shocks on household debt serviceability as many mortgages are expected to renew at higher interest rates.
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The buffer is a measure of the amount of capital the country’s major banks need to have on hand to cover potential losses.
The domestic stability buffer applies to Canada’s six largest banks, known as domestic systemically important banks.
It is reviewed and set every June and December, but can be changed at other times if needed.
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